From the July 2011 issue of Research Magazine • Subscribe!

Signal Seeker

Ex-engineer Bob Robbins analyzes how companies and business cycles tick.

BOB ROBBINS, SENIOR VP, PORTFOLIO MANAGEMENT DIR., HEAD; THE ROBBINS Farley GROUP AT MSSB; MANCHESTER, N.H.

AUM: about $85 million

HOW TO BE A STANDOUT FA? “Go that extra step. Nowadays financial planning [is] almost a given. You need to focus on your experience, collaborate and understand the client very well.”

Portfolio manager Bob Robbins, a former engineer, is a business-cycle signal seeker. He’s on the lookout for economic indicators to help him pick stocks and to know when to buy and sell them.

As a new advisor nearly 20 years ago, the curious Robbins sought to understand what makes the market rise and fall.

“I went back and read the basic papers about Modern Portfolio Theory and found they were full of errors. Their original equations weren’t valid. They said that market movements were random. But it is not a random process — there’s causality, a reason,” says Robbins, senior vice president, portfolio management director and head of The Robbins Farley Group at Morgan Stanley Smith Barney in Manchester, N.H.

A reason, Robbins found, is that when a quality company has good earnings in good economic times, its predictions typically turn out to be right. But when the economy is in a down cycle, corporate projections usually are off, he says.

“So I decided the smart thing to do is invest in companies where earnings are increasing in good economic times and get out of the way in bad economic times,” Robbins explains.

Before becoming an FA in 1992, Robbins, 75, enjoyed a long, successful career as an entrepreneurial electrical engineer. Now as an advisor, his client niche is manufacturing engineering business owners, especially those undergoing a lifestyle transition.  He and 28-year-old partner Colleen Farley (née Casey) have about $85 million in assets under management.

“Bob has a really inquisitive nature. He wants to know how things tick and how to improve them. He’s carried that over from his years in the science field and applies it to his practice,” says Michael Shearin, Robbins’ branch manager.

Key to his signal-and-harvesting investment process, which the certified portfolio manager says helps reduce risk, is to know when to “reap and when to sow. Every time there’s a real pop in the stock or market price, you take a little off the table — you reap it and change your asset allocation.”

He continues. “You’re not trading on a quick in-and-out basis. A business cycle of good economic conditions can last, say, seven years; then there’ll be, maybe, 18 months of bad economic conditions.”

Robbins’s methodology — which he implements with MSSB’s Portfolio Management Group Program — is most of all pegged to earnings. “I pick good-quality companies that are growing their earnings. And like any business owner,” he says, “when one division doesn’t do well and meet expectations, I fire [the stocks] and get another company. They have to meet the earnings’ predictions that they promised…. The reason a stock does poorly is that in bad economic conditions, business owners can’t project what their income will be.”

Robbins knows a thing or two about owning a business; he’s formed and sold at least four.

Born in the Bronx, New York, reared in Stamford, Conn., he was playing trumpet professionally in the 10th grade and had a musician union’s card.
He intended to pursue a music career but at 17 was persuaded to first get a college education. Graduating from Rensselaer Polytechnic Institute with a bachelor’s degree in electrical engineering, he joined, not a band, but General Electric’s electronic warfare department. This being the Cold War era, his job was developing noise jammers that pulled signals from enemy noise jammers.

While working on his master’s thesis at Cornell University, he saw a newspaper ad placed by a small company already producing the jamming technique he was inventing. And he hopped right onboard Sanders Associates. Eleven years later, he started his own electronics company, LRC, which he sold after five years, in 1976.

In a different twist — but foreshadowing his eventual move to brokerage — Robbins then went into business with a German nobleman as commodity trading advisors. Launching Von Haller and Robbins, he programmed computers for trading and developed software. “In the ‘70s, we had two big signals: gold was going up; interest rates were going up,” he recalls. Meantime, Von Haller taught Robbins “an awful lot about how to cold call and working with wealthy people.”

In 1981, he sold his interest in that firm and started another, New England Microwave, which six years later merged with public company Micronetics.  Afterward, Robbins opened another microwave engineering enterprise, ECM Devices, but soon sold it.

He was ready to retire — and did, for about a second. His heart was set on sailing around the world, but he scrubbed that notion when, out boating one day, he ran into a storm.

Enter: Von Haller (once more). He suggested that Robbins become a stockbroker.  Whereupon the versatile Robbins joined Shearson, MSSB predecessor, though, he says, he wasn’t serious and figured he’d stick with the business only briefly.

“But I’m a competitive person and was pretty good at picking stocks; so I made money for my clients. I built up a clientele quickly,” he says. Apart from that, the career shift turned out to be life-changing.

“As an engineer, you think of people almost as tools [to an end]. When I got into this business, all of a sudden people and relationships became very important,” he says. “For the first time in my life, I felt that I was doing something useful for people. It’s very satisfying to help someone when they have problems.”

Throughout his unpredictable journey, Robbins has never given up music. At one point, he was even head of the New Hampshire Philharmonic and today plays trumpet regularly with The Nottingham Brass Quintet, a band he co-founded.

“When you put on a concert,” he says, “you [pump] a lot of adrenalin. So by the time you get to the office, you’re used to working in a stressful environment.”

But meticulous preparation is the big secret to the process-driven Robbins’ success. “I’ve had ups and downs. But when you’re prepared — sometimes for the worst — confident and have faith, you don’t worry. If there’s a problem, you solve it and go on to the next step.”

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